Slaughter contraction supports rendered product price rises

14 July 2016

As highlighted in the latest MLA Co-product market report, Australian meat and bone meal (MBM), blood meal and tallow prices lifted in June – supported by the decline in Australian production as cattle slaughter has slowed in 2016.

MBM prices jumped 12% from last month and were 1% dearer than year-ago levels. Demand from Indonesia, although softer year-on-year, has increased from the low volumes exported from Australia in late 2015 as a result of changes to MBM import regulations.

Further supporting the MBM market was the increase in price for alternative protein sources, such as soybean meal. CME soybean meal July futures spiked considerably from early April and closed on the 30th of June at $405/tonne. This was also assisted by both US MBM prices and soybean meal prices remaining at a premium to Australian product.

Tallow prices also increased, both month-on-month and from year-ago levels, driven predominantly by increased biodiesel production in Singapore, following continuing demand and subsidisation of biodiesel in the US. Alternatives to tallow in bio-diesel production, such as palm stearin, remain dear, aiding demand and supporting prices of tallow. Palm oil prices for June were 7% dearer year-on-year despite easing in recent months (World Bank).

In June:

1% FFA tallow averaged $878/tonne ex-works, up 3% from May and 29% year-on-year